Institutional innovation and inclusive growth: lessons from the coffee and palm oil sectors in Costa Rica

This paper presents an analysis of the contribution of some institutional innovations to a more inclusive growth in the coffee and the palm oil sectors. The paper presents an historical approach, considering the concepts of growth and sustainable development, but specially the notion of inclusive growth. The point of departure is that development is more than just growth. It must consider wider goals, as environmental and social issues. The debate on sustainable development has pointed out the complexity of the process, not only for the inclusion of several dimensions, but also for the presence of different kinds of trade-offs. The challenges are multiple and diverse. Some are related to the economic dimension and in a clear link with growth. But other challenges are related with social issues, including health, income distributions, and access to opportunities, education and similar goals. It is then clear that growth is not the same as development. At sectoral level the difference is also clear. The market structure of a sector and various aspect of the institutional framework are fundamental factors to determine the contribution of growth on development. Institutions that define the structure of the market and opportunities for inclusive growth are fundamental factors. There are some institutions that historically opened opportunities for inclusive growth in the coffee sector in Costa Rica. In the palm oil sector the structure changed drastically once the cooperatives entered to the activity. In principle, there are institutional innovations in both sectors, with impacts in the whole performance of the sector but also in the general economy of the country. The analysis is based in a system of innovation approach, studying the main innovations and the main components of the systems of innovation contributing to the development of the sectors. We use historical information on the main institutions along the time and statistical data to confirm the main arguments.